Funeral Trust investments liquidated

Most of the investments in the Wisconsin Funeral Trust have been liquidated because they were inappropriate for the supposedly conservative investment account, the court-appointed receiver said in a new court filing.

The fund, created by the Wisconsin Funeral Directors Association, was put in receivership in September when it was disclosed that it had a shortfall of more than $21.5 million. The fund has been underwater since at least 2007.

Investments in the fund were "totally inappropriate for this type of investor," John Wirth, the receiver wrote in an update to the Dane County Circuit Court on the status of the receivership. Wirth, a Milwaukee attorney, said he would file an additional brief to describe how the funds were being invested to "minimize further erosion of the Trust's position."

The trust has less than $50 million in assets, although it is supposed to hold more than $70 million. Wirth estimated that the trust's "actual deficiency" is likely $23 million or more. The trust holds money for investors who prepaid their funeral expenses. It was marketed as a conservative investment.

The previously announced plans to sell Requia Life Insurance Co. will likely cost the trust at least $1 million when a deal is completed, Wirth wrote.

The court filing also reiterated comments made by Wirth in previous filings and at a recent hearing over whether Scott Peterson, the fired head of the Funeral Directors Association, should receive unemployment insurance payments. During the hearing Wirth said there were "a lot of pigs at this trough," and said litigation would likely soon be filed in the hopes of recouping the losses. More than three dozen subpoenas have been issued and more than 100,000 documents reviewed, Wirth has said.

“Based on our investigation, I have determined that there was substantial wrongdoing in operating the Trust, and litigation is likely to occur in the near future to recover lost assets and provide more protection for the Trust," Wirth said in a statement issued through a public relations firm representing the receiver. "In the meantime, we are having ongoing discussions with a variety of the parties involved, and I anticipate those conversations will continue."

The update does not disclose the amount of payments made or owed by the trust to Wirth, other attorneys, money managers or consultants working on the receivership.

About Cary Spivak

Cary Spivak does investigative business projects and covers the casino industry. He has won numerous state and national awards.